RPI inflation in July was down to 2.5% while the CPI measure fell more sharply than expected to 1.6% shows latest figures from the ONS

Commuters today learned that they will face a 3.5% increase in rail fares next year after official inflation figures used to calculate the rise were published.

The Retail Prices Index (RPI) measure of inflation for July was 2.5%, down from 2.6% in June, the Office for National Statistics (ONS) said.

Regulated fares can rise by RPI plus 1%. Today’s figure will mean the hike for 2015 will be lower than this year’s 4.1%, but still well above wages, which recently fell for the first time since 2009.

Meanwhile, the Consumer Price Index (CPI) measure of inflation fell more sharply than expected to 1.6% from 1.9%, as a late start for clothing sales spilled over into July.

It means inflation has been below the Bank of England’s 2% target for seven months in a row, the first time this has happened since 2005.

The steep fall is likely to ease any pressure on the Bank to hike interest rates amid speculation about the timing of the first increase since they were slashed to 0.5% five years ago.

Meanwhile, supermarket price wars continued to keep a lid on food and non-alcoholic beverages, which saw a third month in a row of flat or negative inflation - the longest period in nearly a decade.

Figures showed the largest downward contribution to inflation came from clothing and footwear, which fell 5.7% between June and July.

Prices of these products usually fall at this time of year but the drop was larger in 2014 as retailers had held off on discounts in June amid robust demand.

Food and non-alcoholic beverages fell by 0.4% year on year after no change in June and a 0.6% drop in May. The May decline had been the first since March 2006.

The last longest run of flat or falling food prices was at the end of 2004, when they fell on an annual basis for five months in a row.

CPI was also watered down in July by falling prices for spirits and wine, while bank overdraft charges and fees for bankers’ drafts put downward pressure on inflation too.

Increases in used car prices and sea fares made an upward contribution.

RPI is recorded differently, to include housing costs.

Welsh Liberal Democrat Shadow Transport Minister Eluned Parrott said: “Train commuters feel they get a raw deal. Services are regularly overcrowded, often less clean than they could be, and carriages are often old and lack services such as WiFi and air conditioning which should be common place by now.

“If train companies are to increase their fares they need to demonstrate to passengers the improvements that they can expect. Train companies should plan their timetables better to ensure more capacity at peak times, ensure their trains are at the very least clean, and they should prioritise expanding extra services such as WiFi.

“For too long train passengers have felt let down. Now is the time for train companies to show how they can improve the whole passenger experience.”

Elsewhere, a separate measure of Producer Price Inflation saw a 7.3% year-on-year fall for input prices - materials and fuels bought by UK manufacturers. This was the steepest drop since September 2009.

James Knightley of ING Bank said of the sharper than expected fall in CPI: “This further eases the pressure on the Bank of England to consider near-term interest rate rises and pushes the balance more in favour of a delay to rate hikes versus our current November official view for the first policy tightening move.”

Laith Khalaf, senior analyst at Hargreaves Lansdown stockbrokers said: “As long as inflation remains benign, the central bank will also have leeway to raise interest rates slowly and gradually, when they decide the time has come to do so.”

On the rail fare rise he said: “With wages barely growing, this is likely to fuel further claims of a cost of living crisis.”

Jeremy Cook, chief economist at currency exchange company World First said: “For the majority of the Bank of England’s Monetary Policy Committee, this figure will come as a bit of a relief.

“No policymaker would want to be caught between the rock and the hard place of a decision between heading off an inflation number running higher and a wage picture that is seeing pay fall in both real and nominal terms.”

Samuel Tombs of Capital Economics said despite the latest fall the effect of the strong pound - which keeps down import costs - had yet to feed through fully to the shops, while the recent weakness in wages was also likely to continue to keep a lid on prices.

Mr Tombs said it may not be enough to prevent the Bank’s Monetary Policy from starting to “normalise” rates soon - with experts currently anticipating a first hike in February.

But he added: “We believe that a general environment of benign inflationary pressure will give the Committee scope to raise them at an even more gradual pace than currently anticipated by the markets.”

A Treasury spokesman said: “The Government’s long term economic plan is working, with today marking the seventh consecutive month that inflation has been below the Bank of England’s 2% target.”

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